Aloha, Hawaiian to Merge

Fred Wengler · 12-19-2001, 08:00 PM

Aloha, Hawaiian to Merge
Airline Industry Leader Greg Brenneman to Head Combined Company
HONOLULU--(BUSINESS WIRE)--Dec. 19, 2001--In a move designed to ensure the continued viability of Hawaii's interisland air service in a changing marketplace, Aloha Airgroup, Inc. and Hawaiian Airlines, Inc. (AMEX:HA - news; PCX:HA) today agreed to merge Hawaii's two air carriers under a new holding company, Aloha Holdings, Inc.

The new company will be headed by Greg Brenneman, the former president and chief operating officer of Continental Airlines, who for six years helped lead that carrier's spectacular turnaround. Brenneman will serve as chairman and chief executive officer of Aloha Holdings, Inc., which will be a public company traded as Hawaiian Airlines under the ticker symbol HA on the American Stock Exchange (AMEX) and the Pacific Stock Exchange (PCX).

The combined carrier is committing to hold unrestricted interisland fares for two years, and for an additional three years to link increases in those fares to inflation and other adjustments that affect all airlines, such as increased insurance and security rates due to September 11. Beyond this, the carrier will work with the State Attorney General to ensure fair prices for all consumers, including those who currently can arrange their travel at lower fares.

Both Aloha and Hawaiian have been adversely impacted by the global economic slowdown and the dramatic reduction in Hawaii visitors since the tragic events of September 11. These and other financial factors, such as the continuing trend toward more direct flights from the mainland U.S. to Hawaii's Neighbor Islands, have made it uneconomical to maintain dual interisland operations.

``This merger is the best thing these two great airlines could do for the people and economy of Hawaii,'' said Brenneman. ``This state is dependent, like no other place in our country, on frequent, affordable, reliable local air service. The merger will create a flagship carrier for Hawaii that will not only allow the continuation of interisland service that Hawaii depends on, but will also provide the financial muscle and staying power needed to allow us to bring more visitors to Hawaii by growing in new markets, on the Mainland and in the Pacific.''

Since leaving Continental in May 2001, Brenneman has served as chairman and CEO of TurnWorks, Inc., a Texas-based company he founded in 1994, shortly before moving to Continental. TurnWorks invests in and works with firms needing executive turnaround leadership, management expertise and financial re-engineering. During Brenneman's six years as Continental's president and chief operating officer, he worked with management and employees as they developed and implemented a plan which resulted in a dramatic turnaround. Continental moved to the top of the industry in most major airline performance indicators, resulting in a dramatic improvement in shareholder value, reversing 16 years of losses. The company was recognized for outstanding service, including winning the J.D. Power, Frequent Flyer Magazine Award five out of six years for the best customer service of any U.S. air carrier. Continental climbed as high as Number 18 in Fortune (magazine's) ``100 Best Places to Work in America'' before Brenneman's departure.

``I look forward to working closely with all the employees of the new airline as we focus on the basics of providing a great product delivered by people who like coming to work,'' said Brenneman.

The merger is expected to strengthen the company by generating savings of approximately $90 million from the consolidation of operations, elimination of excess aircraft and the coordination of flight schedules, ticket distribution and other functions. The company hopes to minimize the number of employees displaced as a result of the merger and, once profitability is reached, quickly grow so that everyone can come back to work. Brenneman plans to closely involve the unions and employees in making the integration of the two companies a success.

The new airline is expected to have annual revenues of approximately $1 billion, ranking it 10th largest among U.S. carriers, with solid prospects for growth.

The combined company will continue to operate the interisland, Mainland, and Pacific routes currently served by Aloha and Hawaiian, including the operations of Aloha's sister carrier, Island Air, linking Hawaii's primary and secondary airports. The new company also will continue to provide dedicated interisland freight/cargo service.

Aloha and Hawaiian's airline alliance partners will be able to keep their current contracts until they expire. Brenneman said the aim is to work with these partners to develop new agreements as well as to work closely with any airline that wishes to connect its passengers between the Islands.

Under terms of the merger agreement, current Hawaiian Airlines' shareholders will receive approximately 52 percent of the combined company and a six-year, 8-percent note with a face value of $2 per share. Of the 52 percent, Airline Investors Partnership (AIP), Hawaiian's current majority owner, will receive approximately 28 percent and Hawaiian's public shareholders will receive approximately 24 percent. Aloha Airgroup shareholders will receive approximately 28 percent of the combined company, and TurnWorks will receive approximately 20 percent. Additional details regarding the transaction are described in the Annex attached hereto.

An 11-member board of directors will govern Aloha Holdings, Inc. Three members will represent major employee labor units. In addition to Chairman and CEO Brenneman, Han ``Sonny'' Ching will serve as vice chairman. Ching has been chairman of the board of Aloha Airgroup since 1993.

Ching said, ``We see this new venture as the evolution of what Aloha began more than 55 years ago -- an airline especially dedicated to the people of Hawaii. We are fortunate to have a highly respected airline executive like Greg Brenneman to help us carry on this tradition.''

John Adams, chairman of the board of Hawaiian Airlines, said, ``Combining these two companies is something that makes sense now. The events of September 11, the distressed economic climate, and the interest expressed by TurnWorks were the catalysts for taking this step. The merger will create both immediate and long-term benefits for the flying public, Hawaii residents, and the Hawaii economy, as well as for our shareholders.''

The closing is subject to certain federal and state antitrust and other regulatory approvals, which are expected to be obtained in the first half of 2002. Aloha Airgroup's President and CEO Glenn Zander and Hawaiian Airlines' Vice Chairman and CEO Paul Casey plan to retire from their companies when the transaction closes.

Zander said: ``The completion of this merger will fulfill my mission at Aloha, which is to provide a financially stable air carrier that serves the needs of Hawaii and has the strength to expand into new markets. Stability, strength and growth will enable Hawaii's airline to bring increased economic benefits to the state for many years to come.''

Aloha Airlines was founded in 1946 as Trans-Pacific Airlines and is today the largest provider of interisland air transportation services in Hawaii, including passenger, air cargo and contract services. In addition, Aloha offers daily trans-Pacific scheduled air service between Hawaii and Oakland and Orange County in California, as well as Las Vegas, Nevada. Aloha's sister carrier, Island Air, operates scheduled air service to Hawaii's smaller airports.

Founded in 1929 as Inter-Island Airways, Hawaiian Airlines is the first and largest Hawaii-based airline. From Honolulu, Hawaiian provides scheduled and charter air transportation of passengers, cargo and mail among the islands of Hawaii and between Hawaii and seven Western U.S. gateway cities and two destinations in the South Pacific. The nation's 12th-largest carrier, it is also the second-largest provider of trans-Pacific air service between the U.S. mainland and Hawaii.

TurnWorks, Inc., a Texas-based private equity investment firm founded in 1994, focuses on corporate turnarounds and provides services such as management expertise, financial re-engineering, executive search and growth capital.

Mercer Management Consulting provided strategic consulting services in support of the merger.

Additional information on Aloha Airgroup and Hawaiian Airlines is available at www.alohaairlines.com and www.hawaiianair.com. In addition, an investors' presentation is available at www.hawaiianair.com. Updated information on the merger will be posted on both sites as it becomes available.

AV8TOR · 12-19-2001, 08:34 PM

This definitely SUCKS!

b737gearboy · 12-19-2001, 09:08 PM

Quote:

Originally posted by AV8TOR
This definitely SUCKS!

This only the beginning!!!!!!!! More to come.

Chansen · 12-20-2001, 01:38 PM

I have been on both! It is a shame the economy is in a slump.

I hope we see more of these airlines airliners in 1/400th!

DeltaFlot · 12-20-2001, 01:55 PM

I leave the islands to spend a little leave time with the family on the mainland, and within 24 hrs this happens! I reside on Oahu,, and I didn'tsee this coming. On the lighter side, does this mean we'll seee and 737's in the new Hawaiian livery?

Stanman · 12-20-2001, 03:10 PM

This is ridiculous. I would love to say this will never pass federal anti-trust review but I've been wrong before. Still, talk about decreasing competition! That plus we lose the liveries of both which have just come out. We'll have to wait and see what happens.

SonicCruiser · 12-20-2001, 04:33 PM

Will the new combined carrier have a new brand? Will they
stick with the B-717 or B-737's...?

Will we see Hawaiian 737's. or Aloha B-717's? Will they keep
the 767?

sheesh... Let's hope they find jobs for all of our airline friends
at both carriers....

Chansen · 12-20-2001, 04:40 PM

Quote:

Originally posted by SonicCruiser
Will the new combined carrier have a new brand? Will they
stick with the B-717 or B-737's...?

Will we see Hawaiian 737's. or Aloha B-717's? Will they keep
the 767?

sheesh... Let's hope they find jobs for all of our airline friends
at both carriers....

I agree job market was good and has gone to crap. I wish them the best!

Good questions, I hope our Islander friends will fill us in on the merger.

AV8TOR · 12-20-2001, 10:30 PM

Aloha All,

Just to fill you in...

If the deal is passed by the Fed's then the new man in charge, Brennemen/Aloha Holdings Inc. will then form the new company complete with new name and logo! Which inturn results in a sad situation for us locals because we lose jobs along w/ both names/logos (Aloha/HAL) but instead settle for one flagship carrier.

More than likely the new carrier will dispose of the older B732's first and go from there.

I think it may be difficult getting this approved but most of all its kind of sad.

Hawaiian767 · 12-21-2001, 08:40 AM

I think Fred's posting covers all that was presented to the public regarding this merger....Keep in mind that this is just in the talking stages...Many more details need to be approved by the Feds and State of Hawaii to close this deal.

Let me give you an insight of how things really are flying between the islands....I commute from Honolulu to Maui three times a week and the flight I take regularly were usually booked solid prior the the 9-11 tragedy....Yesterday, that flight departed Maui with only 19 passengers on board, and I with another gentleman was the only two in First Class. How in the world is Hawaiian Airlines making money?? As a share holder in Hawaiian, I have grave concerns.

Do I want this merger? NO, Not Really! But I need to concede that the survival of both Aloha and Hawaiian depends on it to continue operating....Both carriers are losing their tail on the inter-island market and Hawaii"s weak economy doesn't help the situation. I would rather appreciate one local carrier than to witness none at all.

I think the story of Alaska Airlines and it's ability to survive these harsh times would be an inspiration to what Hawaiian and Aloha is trying to accomplish with this merger.

Hawaii skies will never be the same....and so too the airline industry.

"Mele Kalikimaka" Merry Christmas to all of you on DAC.com!

Aloha from Honolulu!

12-19-2001, 08:00 PM	#1
Fred Wengler Collector Join Date: Oct 2000 Location: Baltimore Age: 49 Posts: 115	Aloha, Hawaiian to Merge Aloha, Hawaiian to Merge Airline Industry Leader Greg Brenneman to Head Combined Company HONOLULU--(BUSINESS WIRE)--Dec. 19, 2001--In a move designed to ensure the continued viability of Hawaii's interisland air service in a changing marketplace, Aloha Airgroup, Inc. and Hawaiian Airlines, Inc. (AMEX:HA - news; PCX:HA) today agreed to merge Hawaii's two air carriers under a new holding company, Aloha Holdings, Inc. The new company will be headed by Greg Brenneman, the former president and chief operating officer of Continental Airlines, who for six years helped lead that carrier's spectacular turnaround. Brenneman will serve as chairman and chief executive officer of Aloha Holdings, Inc., which will be a public company traded as Hawaiian Airlines under the ticker symbol HA on the American Stock Exchange (AMEX) and the Pacific Stock Exchange (PCX). The combined carrier is committing to hold unrestricted interisland fares for two years, and for an additional three years to link increases in those fares to inflation and other adjustments that affect all airlines, such as increased insurance and security rates due to September 11. Beyond this, the carrier will work with the State Attorney General to ensure fair prices for all consumers, including those who currently can arrange their travel at lower fares. Both Aloha and Hawaiian have been adversely impacted by the global economic slowdown and the dramatic reduction in Hawaii visitors since the tragic events of September 11. These and other financial factors, such as the continuing trend toward more direct flights from the mainland U.S. to Hawaii's Neighbor Islands, have made it uneconomical to maintain dual interisland operations. ``This merger is the best thing these two great airlines could do for the people and economy of Hawaii,'' said Brenneman. ``This state is dependent, like no other place in our country, on frequent, affordable, reliable local air service. The merger will create a flagship carrier for Hawaii that will not only allow the continuation of interisland service that Hawaii depends on, but will also provide the financial muscle and staying power needed to allow us to bring more visitors to Hawaii by growing in new markets, on the Mainland and in the Pacific.'' Since leaving Continental in May 2001, Brenneman has served as chairman and CEO of TurnWorks, Inc., a Texas-based company he founded in 1994, shortly before moving to Continental. TurnWorks invests in and works with firms needing executive turnaround leadership, management expertise and financial re-engineering. During Brenneman's six years as Continental's president and chief operating officer, he worked with management and employees as they developed and implemented a plan which resulted in a dramatic turnaround. Continental moved to the top of the industry in most major airline performance indicators, resulting in a dramatic improvement in shareholder value, reversing 16 years of losses. The company was recognized for outstanding service, including winning the J.D. Power, Frequent Flyer Magazine Award five out of six years for the best customer service of any U.S. air carrier. Continental climbed as high as Number 18 in Fortune (magazine's) ``100 Best Places to Work in America'' before Brenneman's departure. ``I look forward to working closely with all the employees of the new airline as we focus on the basics of providing a great product delivered by people who like coming to work,'' said Brenneman. The merger is expected to strengthen the company by generating savings of approximately $90 million from the consolidation of operations, elimination of excess aircraft and the coordination of flight schedules, ticket distribution and other functions. The company hopes to minimize the number of employees displaced as a result of the merger and, once profitability is reached, quickly grow so that everyone can come back to work. Brenneman plans to closely involve the unions and employees in making the integration of the two companies a success. The new airline is expected to have annual revenues of approximately $1 billion, ranking it 10th largest among U.S. carriers, with solid prospects for growth. The combined company will continue to operate the interisland, Mainland, and Pacific routes currently served by Aloha and Hawaiian, including the operations of Aloha's sister carrier, Island Air, linking Hawaii's primary and secondary airports. The new company also will continue to provide dedicated interisland freight/cargo service. Aloha and Hawaiian's airline alliance partners will be able to keep their current contracts until they expire. Brenneman said the aim is to work with these partners to develop new agreements as well as to work closely with any airline that wishes to connect its passengers between the Islands. Under terms of the merger agreement, current Hawaiian Airlines' shareholders will receive approximately 52 percent of the combined company and a six-year, 8-percent note with a face value of $2 per share. Of the 52 percent, Airline Investors Partnership (AIP), Hawaiian's current majority owner, will receive approximately 28 percent and Hawaiian's public shareholders will receive approximately 24 percent. Aloha Airgroup shareholders will receive approximately 28 percent of the combined company, and TurnWorks will receive approximately 20 percent. Additional details regarding the transaction are described in the Annex attached hereto. An 11-member board of directors will govern Aloha Holdings, Inc. Three members will represent major employee labor units. In addition to Chairman and CEO Brenneman, Han ``Sonny'' Ching will serve as vice chairman. Ching has been chairman of the board of Aloha Airgroup since 1993. Ching said, ``We see this new venture as the evolution of what Aloha began more than 55 years ago -- an airline especially dedicated to the people of Hawaii. We are fortunate to have a highly respected airline executive like Greg Brenneman to help us carry on this tradition.'' John Adams, chairman of the board of Hawaiian Airlines, said, ``Combining these two companies is something that makes sense now. The events of September 11, the distressed economic climate, and the interest expressed by TurnWorks were the catalysts for taking this step. The merger will create both immediate and long-term benefits for the flying public, Hawaii residents, and the Hawaii economy, as well as for our shareholders.'' The closing is subject to certain federal and state antitrust and other regulatory approvals, which are expected to be obtained in the first half of 2002. Aloha Airgroup's President and CEO Glenn Zander and Hawaiian Airlines' Vice Chairman and CEO Paul Casey plan to retire from their companies when the transaction closes. Zander said: ``The completion of this merger will fulfill my mission at Aloha, which is to provide a financially stable air carrier that serves the needs of Hawaii and has the strength to expand into new markets. Stability, strength and growth will enable Hawaii's airline to bring increased economic benefits to the state for many years to come.'' Aloha Airlines was founded in 1946 as Trans-Pacific Airlines and is today the largest provider of interisland air transportation services in Hawaii, including passenger, air cargo and contract services. In addition, Aloha offers daily trans-Pacific scheduled air service between Hawaii and Oakland and Orange County in California, as well as Las Vegas, Nevada. Aloha's sister carrier, Island Air, operates scheduled air service to Hawaii's smaller airports. Founded in 1929 as Inter-Island Airways, Hawaiian Airlines is the first and largest Hawaii-based airline. From Honolulu, Hawaiian provides scheduled and charter air transportation of passengers, cargo and mail among the islands of Hawaii and between Hawaii and seven Western U.S. gateway cities and two destinations in the South Pacific. The nation's 12th-largest carrier, it is also the second-largest provider of trans-Pacific air service between the U.S. mainland and Hawaii. TurnWorks, Inc., a Texas-based private equity investment firm founded in 1994, focuses on corporate turnarounds and provides services such as management expertise, financial re-engineering, executive search and growth capital. Mercer Management Consulting provided strategic consulting services in support of the merger. Additional information on Aloha Airgroup and Hawaiian Airlines is available at www.alohaairlines.com and www.hawaiianair.com. In addition, an investors' presentation is available at www.hawaiianair.com. Updated information on the merger will be posted on both sites as it becomes available.

12-19-2001, 08:34 PM	#2
AV8TOR Insane Collector Join Date: Jul 2000 Age: 34 Posts: 1,052	This definitely SUCKS! __________________ E ola mau ka `ôlelo Hawai`i!

12-20-2001, 01:38 PM	#4
Chansen Complete Wacko! Join Date: Oct 2000 Location: Parker, CO Posts: 3,016	Sad day in Aviation History! I have been on both! It is a shame the economy is in a slump. I hope we see more of these airlines airliners in 1/400th!

12-20-2001, 01:55 PM	#5
DeltaFlot The Patriot Join Date: Jan 2001 Location: Laurel, MD Age: 36 Posts: 3,228	Holy Cow! I leave the islands to spend a little leave time with the family on the mainland, and within 24 hrs this happens! I reside on Oahu,, and I didn'tsee this coming. On the lighter side, does this mean we'll seee and 737's in the new Hawaiian livery? __________________ Febuary 15, 1898 December 7, 1941 June 8, 1967 September 11, 2001 Never Forget, Never Forgive If you kick the Tiger in the arse, you better be able to deal with the Tiger's teeth.

12-20-2001, 10:30 PM	#9
AV8TOR Insane Collector Join Date: Jul 2000 Age: 34 Posts: 1,052	Aloha All, Just to fill you in... If the deal is passed by the Fed's then the new man in charge, Brennemen/Aloha Holdings Inc. will then form the new company complete with new name and logo! Which inturn results in a sad situation for us locals because we lose jobs along w/ both names/logos (Aloha/HAL) but instead settle for one flagship carrier. More than likely the new carrier will dispose of the older B732's first and go from there. I think it may be difficult getting this approved but most of all its kind of sad. __________________ E ola mau ka `ôlelo Hawai`i!

12-20-2001, 03:10 PM	#6
Stanman Senior Collector Join Date: Oct 1999 Location: Waxahachie, Texas, USA Posts: 426	This is ridiculous. I would love to say this will never pass federal anti-trust review but I've been wrong before. Still, talk about decreasing competition! That plus we lose the liveries of both which have just come out. We'll have to wait and see what happens.

12-20-2001, 04:33 PM	#7
SonicCruiser Collector Join Date: Jun 2001 Location: Greenwood, Indiana, USA Posts: 75	Will the new combined carrier have a new brand? Will they stick with the B-717 or B-737's...? Will we see Hawaiian 737's. or Aloha B-717's? Will they keep the 767? sheesh... Let's hope they find jobs for all of our airline friends at both carriers....

12-21-2001, 08:40 AM	#10
Hawaiian767 Junior Collector Join Date: Nov 2001 Location: Honolulu, Hawaii Posts: 19	SURVIVAL!! I think Fred's posting covers all that was presented to the public regarding this merger....Keep in mind that this is just in the talking stages...Many more details need to be approved by the Feds and State of Hawaii to close this deal. Let me give you an insight of how things really are flying between the islands....I commute from Honolulu to Maui three times a week and the flight I take regularly were usually booked solid prior the the 9-11 tragedy....Yesterday, that flight departed Maui with only 19 passengers on board, and I with another gentleman was the only two in First Class. How in the world is Hawaiian Airlines making money?? As a share holder in Hawaiian, I have grave concerns. Do I want this merger? NO, Not Really! But I need to concede that the survival of both Aloha and Hawaiian depends on it to continue operating....Both carriers are losing their tail on the inter-island market and Hawaii"s weak economy doesn't help the situation. I would rather appreciate one local carrier than to witness none at all. I think the story of Alaska Airlines and it's ability to survive these harsh times would be an inspiration to what Hawaiian and Aloha is trying to accomplish with this merger. Hawaii skies will never be the same....and so too the airline industry. "Mele Kalikimaka" Merry Christmas to all of you on DAC.com! Aloha from Honolulu!

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